This proposal seeks continuing support for a program of research examining developments in social and moral understanding during the preschool and early school years, and the relations between these developments and children's close relationships with friends and family. The particular foci of the proposed study is upon friendship, a relationship of major Importance in both revealing and fostering children's social and moral understanding, and relationships with mother and Sibling. The aims are to examine links between individual differences in social and moral understanding and individual differences in friendship over time, In a longitudinal study of 140 children from 4 years to the end of first grade. The focus is upon the socIal processes linking social relationshIps and understanding; the significance of family relationships, gender, temperament, and verbal abilIty in these connections will also be examined. Of special Interest will be the connections between and continuities and changes In children's understanding and close relationships as they make the transitions from preschool to kindergarten, and to first grade. The study will generate data on friendship and social understanding between 4 and 7 years, and provide the opportunity to test competing hypotheses concerning the links between understanding and social relationships.